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Ad Industry Addresses Online Privacy in New Ethics Code

Just as proposals to tighten the belt on the online advertising industry pick up steam in Congress and the White House, the industry itself is touting a new ethics code, with a first-of-its-kind focus on social media and online privacy.

Just as proposals to tighten the belt on the online advertising industry pick up steam in Congress and the White House, the industry itself is touting a new ethics code, with a first-of-its-kind focus on social media and online privacy.

An ethics code is nothing new for the advertising and marketing industries, but never before has social media and online privacy been at the forefront as it is here, with the latest “Principles and Practices of Advertising.”

“The explosion of new technologies is changing the marketing and advertising landscape both domestically and globally. New media, new ideas, new challenges, new cultural opportunities are swirling around the industry and impacting the way it does business,” cites the code’s preamble.

And from there it’s a full focus on social media, specifically behavioral targeting and disclosure of compensation for social media endorsements.

When it comes to online behavioral advertising, the IAE touts the industry’s own horn, citing self-regulatory solutions as the best option for compliance.

The IAE says “advertisers should never compromise consumers’ personal privacy in marketing communications.”

In commentary on this principle, the Institute cites the success of the “Advertising Option Icon” introduced and vigorously backed by trade associations that would let consumers click to get disclosure regarding or opt out of use of their online data on sites collecting behavioral data.

In a recent Senate hearing, the chairman of the FTC, Jon Leibowitz, also recommended allowing the ad industry itself to implement and regulate a White House-endorsed ‘do-not-track’ system for online behavioral advertising, a move that drew the ire of both consumer groups and privacy advocates.

The set of eight principles was released last week by the Institute for Advertising Ethics (IAE), an independent body administered by the American Advertising Federation and the Donald W. Reynolds Journalism Institute at the University of Missouri.

The code was developed by an advisory panel of current and former agency and marketer executives and academics led by Wally Snyder, the IAE’s executive director and president emeritus of the AAF.

In terms of endorsements, the code also aligns with the FTC in directing advertisers to clearly disclose all material conditions, including payment or receipt of free product, affecting endorsement in social media channels.

In remarks on this point, the code quotes P&G Global Brand-Building Officer Marc Pritchard as saying: “The anonymity of the online world requires extra efforts for practicing ethics.”

The code also stresses that, amid growing number of outlets and media sources online, advertisers must clearly distinguish advertising, public relations and corporate communications from news and editorial content and entertainment.

Just how you do that in the age of Foursquare, Twitter and Facebook is something the industry appears to still be debating, but erring on the side of over disclosure.

Pete Blackshaw, head of global digital and social media and marketing for Nestle, is quoted as saying: “Disclosure with bloggers may well be the easy part. How do you responsibly disclose when 140 million global members of Twitter are restricted to 140 characters per tweet, and any attempts at disclosure gets lost in the first pass-along? Acknowledge — forcefully — that responsible advertisers must be extremely proactive on this front, and perhaps even over-compensate.”

The man behind the new principles, Walt Snyder, indicated he hopes to see marketers and agencies adopt the principles and get members and employees to sign pledges committing to follow the code.

“I believe [the code] will lead to a new way of thinking about ethics from, ‘Well, we should be ethical’ to ‘We’ve got to be ethical to build our business better, ‘” he said.

The Institute plans to launch a series of webinars and conferences to educate advertising companies and their employees, and seek feedback to ensure the principles remain an evolving and improving work in progress.

“The focus of this is education,” said Snyder. “These are not set in stone.”

The eight “Principles and Practices of Advertising” as laid out by the IAE:

Advertising, public relations, marketing communications, news, and editorial all share a common objective of truth and high ethical standards in serving the public.

Advertising, public relations, and all marketing communications professionals have an obligation to exercise the highest personal ethics in the creation and dissemination of commercial information to consumers.

Advertisers should clearly distinguish advertising, public relations and corporate communications from news and editorial content and entertainment, both online and offline.

Advertisers should clearly disclose all material conditions, such as payment or receipt of a free product, affecting endorsements in social and traditional channels, as well as the identity of endorsers, all in the interest of full disclosure and transparency.

Advertisers should treat consumers fairly based on the nature of the audience to whom the ads are directed and the nature of the product or service advertised. Advertisers should never compromise consumers’ personal privacy in marketing communications, and their choices as to whether to participate in providing their information should be transparent and easily made.

Advertisers should follow federal, state and local advertising laws, and cooperate with industry self-regulatory programs for the resolution of advertising practices.

Advertisers and their agencies, and online and offline media, should discuss privately potential ethical concerns, and members of the team creating ads should be given permission to express internally their ethical concerns.